Carphone Warehouse hit by housing slowdown

As a result of lenders tightening their lending criteria and falling house prices, Carphone Warehouse has experienced a fall in its share price by over 10%.

Last week, shares in the company hit their lowest levels since October 2005.

Experts believe that new broadband customers are acquired after moving home. However, the current economic climate means that nobody is moving house and as a result, this is having a knock-on effect on new broadband customers.

Since house prices have fallen, many industries have suffered. Construction, in particular, with many housebuilders announcing job losses and cutting back building on new sites.

Estate agents, in particular, are suffering but other industries such as materials suppliers and removal men are also struggling.

However, the unwillingness to lend means that broadband providers and suppliers of mobile phones are suffering too.

Charles Dunstone, Carphone’s chief executive, said so far this year, broadband net adds are lower than expected. The housing slowdown and a strong performance in mobile broadband sales in our stores have resulted in lower gross adds.

However, Mr Dunstone did add that in spite of the disappointing results, the number of customers switching supplier is lower than its rivals.

Graham Spooner, an investment adviser at The Share Centre, said Carphone Warehouse has been listed as a ‘buy’ for investors but due to the current economic climate, the housing slowdown and consumers feeling the pinch from rising inflation, we now feel the company is no more than a ‘hold’ for investors.

Mr Spooner concluded by saying that he is concerned about Carphone’s future position. Should its share price continue to decline, the company could be relegated from the FTSE 100 sooner rather than later.

Carphone is the third largest broadband provider in Britain and has over 2.7 million residential broadband customers.

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